Second Inspirations warning

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The Independent Online
Inspirations, Britain's fourth-largest tour operator, found itself at the centre of intense takeover speculation yesterday after issuing its second profits warning in only six weeks.

Hit by flight delays in the summer and adverse publicity after a critical television documentary, the company is expected to plunge to a pounds 13m loss compared with expectations only two months ago of an pounds 8m profit.

Shares in Inspirations fell 6p to 73.5p as disappointment at the profits warning was tempered by the growing expectation that another travel firm will step in to buy the business. Minneapolis-based Carlson Travel has been tipped as a natural partner for Inspirations since the two already operate part of the AT Mays travel agency chain in a joint venture.

Vic Fatah, Inspirations' chief executive, said yesterday that results for the year to September would be "substantially below market expectations". Those expectations had already been reined in to only break-even, following the warning at the beginning of October that the company had been hit by flight delays following the failure of its engineering supplier, a subsidiary of British Airways, to meet agreed schedules.

Inspirations said the cost of the well-publicised delays was about pounds 14m compared with its earlier estimate of about pounds 8m. It added that it was negotiating a settlement with British Airways and had renegotiated its relationship with the engineering arm so that a new dedicated team would be set up at Gatwick to service Inspirations Caledonian Airways fleet.

That was expected to prevent a repeat of the long delays to holiday flights that had provoked fierce criticism of the company on a Watchdog programme in September. That adverse publicity led to a slump in demand for Inspirations holidays during the month which aggravated an existing oversupply problem following the takeover of capacity previously sold by collapsed seat-only operator The Flight Company.

The warning from Inspirations is the latest blow for an industry still reeling from the unexpected decision last week by the Office of Fair Trading to launch a Monopolies Commission investigation into the travel business.

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